A. Schulman in joint venture with NATPET to produce polypropylene compounds in Saudi Arabia

A. Schulman has entered into a joint venture agreement with National Petrochemical Industrial Company (NATPET) of Jeddah, Saudi Arabia, a subsidiary of Alujain Corporation.  The 50-50 joint venture, expected to be named NATPET-Schulman Engineering Plastic Compounds, will produce and globally sell polypropylene compounds. The joint venture is planning to build a polypropylene compounding plant in Yanbu, Kingdom of Saudi Arabia, where it expects to begin production by the end of calendar-year 2014.

A. Schulman's initial equity investment in the relationship is approximately EUR 11 million, or approximately $14 million. Initial project costs, including construction of the facility, infrastructure needs as well as working capital requirements are approximately EUR 55 million, or approximately $70 million based on current exchange rates. Beyond the initial equity investment by the partners, the joint venture intends to take advantage of various low-interest loan options provided by the Saudi Industrial Development Fund and other lending institutions.

The joint venture will manufacture a line of customer-preferred engineered plastic compounds based on A. Schulman's highly regarded technology. NATPET, a well-established petrochemical producer in the region, will provide the joint venture with its regional infrastructure as well as its high-quality polypropylene resin.

The joint venture's new plant will enable A. Schulman and NATPET to serve a broad range of customers in the Middle East, Africa and India to capitalize on the growing demand for durable goods and transportation products. All sales outside of these regions will be sold directly through A. Schulman.

In addition to the joint agreement, NATPET also agreed to enter into a distribution agreement, where A. Schulman will, effective immediately, distribute polypropylene resins for NATPET in Europe to specified customer segments.